Expats to receive pension letters

The Department for Work and Pensions (DWP) is writing to more than 363,000 British expats who have retired and are now living in the European Union to reassure them that their state pension will still increase in the event of a no-deal Brexit.

However, the letter adds that the guarantee is only valid for three years, should the UK crash out of the EU with no deal, and this has led many of them to a “period of uncertainty”.

It is still uncertain whether the Government will be able to negotiate a new arrangement to ensure that the uprating, which is an increase of at least 2.5 per cent annually, will continue. Moreover, critics fear that any pension negotiation could result in state pensions being used as a bargaining tool in wider negotiations.

As one commentator remarked, with many people these days living into their nineties and beyond, a three-year guarantee will be inadequate and only serve to increase their anxiety.

According to the DWP, during the three-year period, the Government plans to negotiate a new arrangement with the EU to ensure that the uprating continues, with Thérèse Coffey, Secretary of State for Work and Pensions, underlining that pensioners in Europe “who have paid into the system for years deserve peace of mind over their future finances”.

The Government’s website states that the state pension will only increase each year after the three years if the claimant lives in the European Economic Area (EEA), Gibraltar, Switzerland, or a country that has a social security agreement with the UK, which does not include Canada or New Zealand. However, if the retirees return to live in the UK, then their state pension will return to the current rate.

The DWP has established a dedicated call centre to answer any questions from those who might be affected.

Steve Horton, Financial Planning Partner at Milsted Langdon said: “Expats living in the EU should ensure they receive confirmation regarding their state pension rom DWP.

“If you feel you are likely to be affected in the future by anything mentioned above it is important that you seek specialist advice at the earliest opportunity.”

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